Europe Obsolescence Equals Opportunity

Conclusion The European office market is increasingly splitting into three elements. Top grade stock that is attractive to many and in high demand, ageing and non-updated stock that is in many ways obsolete, and is likely to require repurposing and finally a large amount in the middle that requires repositioning to avoid slipping into obsolescence. The sector faces a challenge to evaluate, create and execute the right strategies for the large swathe of assets that face the dual issues of not meeting occupier needs nor being sustainable (in line with upcoming sustainability legislation). Analysis of an expanded view of the market beyond top grade stock is fundamentally important. Supply of available office space is declining—net absorption remains positive over the forecast period, and lease expirations are mounting as tenant preferences shift towards offices that deliver much more than a physical place to operate from. This paper identifies and evaluates the sector’s risk, whilst highlighting successful strategies used to align properties with the demand of

sustainability regulations and adapting to meet the exacting requirements of the modern tenant. Recognising that budgetary considerations are key in preserving income and maximised asset value, it is important to assess each building from an individual perspective, as well as from the context of a broader portfolio. There is no ‘one size fits all solution,’ but learnings taken from around the world allow evolution to take place in a measured and intentional manner. Cushman & Wakefield has formed a pan European, multi-disciplinary team as part of a global response to the office sector’s need for rethinking, reimagination, repositioning and repurposing. Just as the retail sector has faced critical junctures of necessary adaptation and evolution, the office sector now faces a similar chapter. This chapter of necessary evolution and adaptation will fall on the shoulders of the entire ecosystem – whether that be through public-private partnerships at the government level or throughout the spectrum of ownership and the investment community. Proactively addressing the need for transformation throughout the bulk of the commodity office stock in Europe will help to position the sector for long-term viability.

today’s tenants. There is a wide breadth of solutions that address the issues of meeting

The Next Evolution of Office and How Repositioning and Repurposing Will Shape the Future of European Real Estate | 21